Last month the NSW State Budget was delivered. The NSW Government has announced different measure designed to stimulate the NSW economy with changes being made to property owners or businesses. The expected Budged deficit as stated will reach $16 billion next year as mentioned by NSW Treasurer Dominic Perrottet. The current situation with the deficit has urged the Government to have a Budget that delivers support to businesses and can create more jobs. In our previous article we we provided a snapshot of the current winners and losers. in this article we take a look into Payroll Tax and Stamp Duty.
Payroll Tax
A number of changes will be made to payroll tax as the government has anticipated. The Government hoping the savings will be used by employers to invest in new staff and business growth. Another change to payroll tax is the Government hoping the savings will be used by employers to invest in new staff and business growth. The Payroll Tax Act 2007 will be revised to provide a temporary reduction of the payroll tax rate used to calculate the payroll tax imposed on taxable wages.
Under The Payroll Tax Act 2007, the current payroll tax rate is 5.45 per cent. The proposed amendment reduces the payroll tax rate to 4.85 per cent for the period on and from 1 July 2020 until the end of 30 June 2022 and clarifies that the reduced rate is to be applied for the purpose of determining the correct amount of payroll tax payable by an employer for the financial year commencing on 1 July 2020. From 1 July 2020 and onwards the payroll tax threshold will also increase from $1 million to $1.2 million. This can lead to businesses who will no longer have to pay payroll tax and could potentially lea to a $2.4 billion savings to business for this fiscal year and the years to come.
The Government has also announced a payroll tax exemption for any additional JobKeeper payments to employees above the usual wages they would have received for the work performed.
Stamp Duty
NSW Treasurer Dominic Perrottet announced plans to shift stamp duty to property tax. This will allow a purchaser to have an option of paying property tax each year or pay their stamp duty upfront. If property tax is chosen, this will be locked in for future owners of the property. Currently this change has not been made applicable yet. The NSW Government is embarking on a Public Consultation process to hear from the Public about the proposed reforms.
By removing the upfront cost of stamp duty this could lead to buyers saving money when purchasing a home and make it easier for families or first home buyers to purchase or upgrade their home. If you have already paid stamp duty on your existing property, you would not be subject to an annual property tax. There would be no double taxation.
If you have any questions regarding the above article, please do not hesitate to contact one of the partners here at Fortis Accounting Partners on (02) 9267 0108 or info@exemplary-financial.flywheelsites.com
